Financial Analysis

Financial Analysis

Financial Analysis

THE BUSINESS AND FINANCIAL PERFORMANCE OF AN ORGANIZATION OVER THREE YEARS

Introduction

This report is about the financial analysis of two retail companies, Wm Morrison Plc and J Sainsbury Plc. The aim of this report is to contrast both companies against each other to find out which business is doing better then the other. This report will start off with Wm Morrison's two years financial report and followed by Sainsbury's two years financial report and the conclusion will be on which company doing well and why is it doing well. The financial ratio analysis comprises of four parts, which are as follows (Gowthrope, 2009):

i. Performance Ratios: It is utilised to assess the relation success or malfunction of enterprise performance.

ii. Working Capital Efficiency Ratios: It is used to assess the extent to which asset and liability items are well utilised and well managed.

iii. Investment Ratios: It is used to assess various items of particular interest to investors.

iv. Financial Status: It is used to assess the extent to which a business can comfortably cover its liabilities.

These ratios will be used to assess how both companies are performing.

Wm Morrison supermarkets plc

Morrisons was founded by William Morrison in 1899 in Bradford, England as a market stall. After that, a small town -centre shop is opened in 1958.The company's first supermarket is opened in 1961 in Bradford called "Victoria". The company became a public limited company in 1967.By continuing its operations and achieving constant success, it expanded beyond Bradford and as a result in 1978 it entered Lancashire by the takeover of Whelen Discount stores. In 2000, it opened its first store in Wales and in 2001 Morrisons joined the FTSE 100 for the first time. Afterwards its first store was opened in Scotland in 2004.Year 2004 is an important year for Morrisons, as in this year, it takeovered Safeway in March 2004 and Wm Morrison supermarkets plc became the U.K.'s fourth largest supermarket group. It is headquartered in Bradford.

By November 2005, Morrisons has completed the conversion process of Safeway stores into Morrisons format.

Morrisons offer both branded and own - label products. Morrisons provides a full range of fresh, chilled and frozen foods, groceries, drinks and other household essentials.

By 2010, Morrisons had 368 stores, 10.5m square feet of selling space and employed nearly 117000 people.

Management

The present chairman of Wm Morrison plc is Sir Kenneth Morrison CBE and deputy chairman is Sir Ian Gibson .The present C.E.O. is Marc Bolland who joined Morrisons in September 2009 .In 2010, its board consists of 4 non-executive directors and 5 executive directors. All non- executive directors work independently .

All Board members are experienced and plans are evaluated before implementation. Morrisons also has an internal control system which manages risk. Morrisons also take care of its shareholders and invites their suggestions and recommendations.

Sector and geography

Morrisons operates primarily in food and retail supermarket sector. But it also has its petrol pumps. By 2010, with 368 stores across U.K., it has 278 offering petrol filling ...